RIL makes Rs 5.6k-crore initial offer for Metro Cash & Carry India; CP Group bids Rs 8k crore


Reliance Retail has submitted a non-binding bid of around Rs 5,600 crore to acquire Metro Cash and Carry’s India operations and assets, which are up for sale, said three industry executives aware of the development.

Thailand’s largest conglomerate, Charoen Pokphand (CP) Group, has placed a bid of about Rs 8,000 crore, or $1 billion, which almost matches the German wholesaler’s expectations. Metro India gave detailed presentations on performance and growth potential to senior teams from the two bidders in the presence of merchant bankers in Bengaluru two weeks ago, said the people cited.

In response to an email from ET, a Metro Cash and Carry India spokesperson said, “We do not comment on rumours and speculations and we hope for your kind understanding.” Emails sent to Reliance and CP Group remained unanswered till press time on Sunday.

One of the persons aware of the development said German parent Metro AG is concerned about the regulatory environment in India and the ‘swadeshi versus videshi’ debate. Lobby groups representing Indian retail companies have upped the ante against overseas retailers, alleging violation of foreign direct investment (FDI) norms, which the foreign companies have always denied.

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“Against this background, Reliance has an edge over others because it is the only Indian company serious about buying Metro India. Thailand’s CP Group is also hugely interested because it already has a presence in India through Lots Wholesale outlets,” one of the persons said.

JP Morgan and Goldman Sachs are the merchant bankers of Metro Cash and Carry India, which has valued the business at about $1 billion. Final binding bids are likely to be submitted within a month, during which, according to some industry experts, the bid amount could change.

Earlier this year, Metro reviewed its India business and decided to exit due to the need for higher investment to compete with deep-pocketed rivals such as Reliance and Amazon.

Metro Cash and Carry India clocked sales of Rs 6,738.3 crore in FY21, a growth of 4% over the previous year. The company follows the October to September fiscal year.

One of the executives said Metro owns seven of its 31 wholesale stores in India, while the rest are on lease. These land parcels are expected to improve its valuation from initial estimates, he said. ET earlier reported that Reliance, CP Group and Lightspeed Venture Partners were in the fray to acquire the German wholesaler’s India business.

The venture capital firm is the majority shareholder of online wholesale platform Udaan. At one point, even Swiggy and PremjiInvest showed interest.

FDI VS SWADESHI

Overseas investment in offline trade has been a sticky issue despite India allowing 100% FDI in wholesale trade on a cash and carry basis, where Metro was one of the first companies to enter India in 2003. There has often been resistance from political parties and lobby groups to foreign investments in retail.

Some trade lobbies recently wrote to the government on how a few global wholesalers have been flouting FDI norms by selling to consumers directly. India’s retail policy does not allow direct sales of multibrand goods by overseas companies to mitigate negative impact on kirana shops.

Retail, India’s largest retailer, has been focusing on B2B wholesale business as part of its strategy to rope kiranas and smaller stores into its ecommerce network.

In India since 2017, CP Group operates three wholesale stores in Delhi-NCR — Lots Wholesale Solutions — along with an ecommerce platform. According to its website, the company aims to set up 15 stores in the next three years.



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